Though overall sales and earnings at larger bank brokerages increased in the first quarter, their sales of their own funds fell, according to a survey for the Bank Securities Association.
The study of 26 bank brokerages by Kenneth Kehrer Associates found they had earned an average of $918 per $1 million of retail deposits. That is up 28.75% from a year earlier and 15.62% from the fourth quarter.
But their sales of mutual funds were flat, and those of their own funds dropped to 7.89% of the fund total, from 13.16% a year earlier and 10.53% in the fourth quarter. Sales of bank proprietary mutual funds as a percentage of total investment products also dropped, to 3%, from 5% a year earlier and 4% in the fourth quarter.
Geoffrey H. Bobroff, a mutual fund consultant in East Greenwich, R.I., said bank-run funds have suffered because they are typically more value- stock-oriented. "Value investing was hurt in terms of appeal and attractiveness through all of 1998 and into the first quarter of 1999," he said.
Some banks may also have been less focused on marketing the funds because of merger-related activity, Mr. Bobroff said.
Meanwhile, the key sales measure-gross commission revenues-was up for full-time investment representatives and for branch employees who sell investment products part-time, the survey found.
Productivity is "back to almost as good as it was in the middle of last year before the market correction," said Kenneth Kehrer, the principal of the Princeton, N.J.-based firm that conducted the survey.
Full-time, or dedicated, representatives reeled in average monthly gross commissions for the bank brokerage of $24,018 in the first quarter, up 11.43% from a year earlier and 14.18% from the fourth quarter.
Branch employees selling investments generated $1,332 per month for the bank, up 40.21% from a year earlier and 39.33% from the fourth quarter.
Seattle-based Washington Mutual Inc., one of the banks surveyed, had more than $43.4 million in commission income in the first quarter, a 294.55% increase from a year earlier, J. Pamela Dawson, the president of WM Financial Services, said in a recent interview.
In January the $174.30 billion-asset thrift integrated the brokerage of H.F. Ahmanson, which it bought in October, and put all its brokers on the same compensation schedule. That helped the bottom line, Ms. Dawson said.
The brokerages surveyed are affiliates of banks or thrifts with assets of more than $1 billion. Most rank among the country's 50 largest banks.